Ebay Case Anlysis

Introduction

EBay, the world's largest and most popular online marketplace, allowing people and business to buy and sell a broad variety of goods and services worldwide. It was founded in 1995 by an entrepreneur working from his home. In 1998, the company went public. Now, eBay has localized website in over 39 countries, with approximately 235 million active users by the end of 2010. In this paper, I am going to anlysis eBay's in ternaitonal business strategies, weather eBay really create a new type of market or not and is continued growth desirable and possible for eBay.

eBay's international business strategies

Generally, company chose to make international business is for the purpose of satisfying the needs of individuals and organizations. Two of the most common types of inteernational business activity are export/import and foreign direct investment(FDI)( (Rugman and Collinson, 5th Edition). There are three ways for multinational enterprise(MNE) to maintaining their competitive position. One way is by drawing up strategies that focus on regions and geographis areas, thus ensuring that they are addressing the needs of their local customers. eBay continued to expand its business worldwide, in order to gain more marketplace and attract new users. EBay use either acquires local company or partner with a local company. Partnership abroad and alliances with international companies can be crucial for company to be succesed. By partnering with the foreign companies, it will help eBay to differentiate it products and services to adapt to its local market, it will also allow eBay to use its economices of scale and scopes. Alliance allow eBay to participate in markets where it doesn't have the first mover advantage. One example of eBay fail to expand its business overseas is set up its site in Japan. Since Yahoo! dominate Japan's online marketplace. Another example will be China.

An sucessful example will be bBay combie Gmarket, Korea's leading e-commerce business, with eBay's existing online marketplace in Korea. According to John Donahoe, eBay's president and chief executive officer," the combination of Gmarket and IAC establishes an exceptionally strong leadership position for eBay in one of the world's largest, most dynamic and innovative e-commerce markets, this deal creats strong operational synergies between the two market leadrs, offers more opportunties for sellers and enhances our ability to serve complementary consumer segments"( Anonymous,2009). Another way is by continuing to be innovative. EBay's growth strategy is focusing on investing customers by improving services and products to the sellers and buyers. A third is by maintaining competitive position by addressing the determinats of national competitve advantage. Some markets, such as UK, France and Canada, were entered without acquistions. Today, eBay is the maket leader in the UK and Canada. There are two major acquisitons from eBay were Skype and PayPal. But eBay sold Skype to an investor group for cash in november 2009. The acquistion of PayPal allow eBay to attract more new users since the payment tranction on the site is more secure and much more faster than the traditional payment methods. Overall, the main eBay's international business strategies are expand its business worldwide by joint venture or acquition and continue innovate and improving its product and services. It is suggested that acquistion to the foreign company will be much easier for eBay to enter the local market, it also reduce the constrains and the local company is much more familiar to the local market, such as the regulation, culture and market demand.

Has eBay really created a new type of market?

EBay provides a unique model in which the operation is driven by the consumer and the seller whilst the EBay simply provides the platform within which the transaction takes place. EBay brings together millions of buyers and sellers every day on a local, national and international basis through an array of websites. Ebay provides online marketplaces for the sale of goods and services as well as other online commerce, platforms and online payment solutions to a diverse community of individuals and businesses. According to the case study, eBay earns net profit of $441.8 million in 2003, 40% of its revenue are derives from international trade. EBay believes that they create a new marketplace platform which make the inefficient market more efficient by providing easy to use platforms, offering wide range of products from all over the world and bring buyers and sellers together in a more cost-effective way. Buyers could make their purchase through the auction format or pay at the fixed prices through the Buy-It-Now format or through eBay's other website(Half.com